Insolvency

There are various tests for insolvency, but essentially, if you think the company is unable to pay its debts, it is your duty as a director to ensure you do not take on further debt. Relying on future deals, or finance that has yet to be approved, is no defence against insolvent trading. More critically you are now in danger of any of the following:

• Receiving statutory demands, wind up orders and a liquidator arriving at the front door;
• Receiving a penalty notice from the ATO and personal liability;
• The ATO taking money from your business account or even directly from your customers;
• Losing control of your business and being made liable for company debts.